This application relates generally to systems and methods for electronic payment devices. More specifically, this application relates to systems and methods for providing a transceiver-based device to consumers for executing electronic payment transactions.
Over the past decades, a new technology has caused a significant shift in point of sale (POS) transactions away from cash and checks and towards electronic payment devices. Consumers have found added convenience with devices like credit cards, debit cards, and stored-value cards.
Credit and debit cards typically comprise a standard-sized plastic card with a magnetic stripe, or magstripe. These magstripes store a large amount of information, including account number, country code, account holder name, expiration date, and other discretionary and proprietary data. Most POS's which accept credit and debit cards have magstripe readers, which read the information from the magstripe. The reader then communicates the information to the appropriate financial institution to verify and complete the transaction.
Unfortunately, there are a number of issues with magstripe technology. First, magstripes are prone to destruction, usually through scratching or exposure to magnets. Second, magstripe readers are often bulky, expensive, and unreliable; they must be large enough to accommodate swiping the magstripe through the reader, and must comprise a number of mechanical and magnetic elements for reading the information from the magstripe. Third, because credit and debit cards tend to be linked to financial accounts, it is difficult to control their use. For example, a parent may find it difficult to limit a child's ability to spend, or a victim of identity theft may be susceptible to large fraudulent charges. Fourth, merchants often incur large fees from financial institutions for processing credit or debit transactions.
Partly in response to these last two issues, financial institutions began offering “stored value” cards, or “electronic purse applications.” With these cards, a cash equivalency is stored on the card, rather than the card being linked to an account. Value may be added to the card either by transferring cash or by transferring money from a financial institution, at a kiosk, automated teller machine (ATM), by phone, or by some other means. Because the cards carry only a specific cash equivalence, cardholders may better limit their susceptibility to large unauthorized transactions. Further, because the cards are not associated with financial accounts, merchants may incur lower processing fees for handling transactions with stored value cards.
Still, stored value cards also have issues. For example, in order to reliably store the cash equivalence of the card and be able to update the remaining balance, the cards typically require relatively large, expensive, and powered on-board electronics. Further, stored value cards are typically delivered to consumers in a credit card-like form, making them potentially inconvenient to carry.
Thus, though current electronic payment devices are more convenient than cash or checks, they remain relatively inconvenient. It may therefore be desirable to offer consumers electronic payment devices which are convenient to carry and easy to use for payment, while still inexpensive for merchants to support.